The Success Of Wal-Mart is truly exceptional in the retail business. Ideally, it is not very difficult to recognize the factors that lead to this success. Wal-Mart can offer clients reduced prices on a daily basis, and its considerable success is pegged on procedures and tenets. Investors study the timeline of the retail giant in an attempt to comprehend the process that facilitates its price reductions.
The incredible success which is enjoyed by Wal-Mart is as a result of the foundation laid by the company from the beginning of its operations. Noteworthy, the firm succeeds because it applies the approach of offering reduced prices contingent on scale/volume. On the other hand, Wal-Mart acknowledges that despite its slim margins, which rival most retail companies, it can compensate through its sales volumes. Over time, these sales volumes allow for the economies of scale and a bargaining power that gives the company an opportunity to mold the retail industry to its benefit.
A particular factor that can be attributed to Wal-Mart’s phenomenal success is its ability to decrease operational and overhead costs. Applying the model founded by Sam Walton for low-cost operation, the firm maintains low overhead costs. However, there are downsides to this model. Wal-Mart executives do not receive any special treatment and share accommodation with others. The firm’s low-benefit healthcare and low salaries are frequently opposed and publicized. Additionally, they are claims that employees of the company are asked to reduce the costs of operation, including air conditioning in the buildings.
There is an apparent reason why Wal-Mart experiences difficulty in foreign markets such as South Korea and Brazil. Customer preferences are globally diverse for some reasons. On the other hand, there are times when consumers prefer local retailers and skip one-stop shopping. As a result, it makes it difficult for the firm to succeed in foreign markets.
Overall, Wal-Mart will most likely remain a retail giant for a long time. However, the firm will need to explore the different ways that it can solve its difficulties particularly concerning foreign investment and employee welfare/remuneration.